Atibir Hi-Tech Pvt. Ltd., Kolkata V. DCIT, Central Circle - XI, Kolkata, Kolkata

ITA 1221/KOL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3374 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2011
• Court: TRIBUNAL
• Department Lawyers: ANIL KR
• Assessee Lawyers: AKKAL DUDHWALA ACA LD
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Tax effect
• Section: 143(3); 133A

Judgement Text

ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1221/KOL/2011 ASST YEAR 2008-09 M/S. ATBIR HI-TECH PVT. LTD VS. D.C.I.T, CC-XI, KOLKATA PAN: AABCA 4466C (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI AKKAL DUDHWALA, ACA, LD.AR FOR THE RESPONDENT: SHRI ANIL KR. PAND E, JCIT, LD.DR DATE OF HEARING: 22-12--2015 DATE OF PRONOUNCEMENT: 20 -01- 2016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A), CENTRAL-1, KOLKATA IN APPEAL NO. 91/CC-XI/CIT(A), C-I/10-11 DATED 19-08-2011 FOR THE ASSESSMENT YEAR 2008-09 AGAINST THE PENALTY O RDER PASSED BY THE LEARNED AO U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE PENALTY U/S 271(1)(C ) OF THE ACT COULD BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT A SURVE Y OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE FACTORY PREMISES OF THE ASSESSEE O N 24.1.2008 WHEREIN THE STOCKS WERE INVENTORIZED BY EMPLOYING A SURVEYOR. THE LEA RNED AO OBSERVED THAT THE STOCK OF MATERIALS FOUND AT THE FACTORY WAS MORE THAN THE STOCK RECORDED IN THE BOOKS TO THE TUNE OF RS. 7,05,210/- WHICH WAS ADDED AS UNDISCLOS ED INCOME OF THE ASSESSEE. NO APPEAL HAS BEEN FILED AGAINST THE QUANTUM ADDITION. WHILE COMPLETING THE ASSESSMENT ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 2 PROCEEDINGS, THE LEARNED AO INITIATED PENALTY PROCE EDINGS U/S 271(1)( C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME. THE ASS ESSMENT WAS COMPLETED U/S 143(3) OF THE ACT FOR THE ASST YEAR 2008-09 ON 31.12.2009. THE ORDER OF PENALTY U/S 271(1)(C ) OF THE ACT WAS PASSED ON 29.6.2010 LEVYING PENALTY @ 300% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITION OF RS. 7,05,210/- AND PENALT Y OF RS. 6,53,727/- WAS LEVIED ON THE CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME. ON FIRST APPEAL, THE LEARNED CITA CONFIRMED THE LEVY OF PENALTY BUT REDUCED THE SAME FROM 300% TO 100% OF TAX SOUGHT TO BE EVADED. AGGRIEVED, BOTH THE ASSESSEE AS WELL AS THE REVENUE WERE IN APPEAL BEFORE US. THE REVENUES APPEAL HAS BEEN DI SMISSED FOR LOW TAX EFFECT BASED ON THE CIRCULAR NO. 21/2015 DATED 10.12.2015. THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS BEFORE US :- 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS UNJUSTIFIED IN LAW & ON FACTS IN IMPOSIN G PENALTY U/S 271(1)(C ) OF THE ACT EVEN THOUGH THE APPELLANT WAS NOT GUILTY OF CONCEALMENT OF INCOME. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS UNJUSTIFIED IN HOLDING THE APPELLANT GUI LTY OF FURNISHING INACCURATE PARTICULARS IN RESPECT OF ALLEGED DISCRE PANCY IN STOCK EVEN THOUGH THE STOCK TAKING CONDUCTED BY THE SURVE Y TEAM WAS ON EYE ESTIMATE WITHOUT HAVING ANY QUALIFICATION FOR U NDERTAKING STOCK EXERCISE. 3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS GROSSLY UNJUSTIFIED IN LEVYING PENALTY U /S 271(1)(C) EVEN THOUGH NO DEFECTS IN THE STOCK RECORDS REGULARLY MA INTAINED AND QUANTITATIVE DETAILS CERTIFIED BY THE AUDITOR COULD BE FOUND. 4) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN LEVYING PENALTY OF 100% U/S 271 (1)( C ) OF THE TAX ON THE GROUNDS THAT THE APPELLANT HAD AC CEPTED THE ADDITION AND DID NOT PREFER AN APPEAL; HENCE, THE A PPELLANT WAS GUILTY OF FURNISHING PARTICULARS OF INCOME. ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 3 5) FOR THAT THE APPELLANT CRAVES LEAVE TO SUBMIT AD DITIONAL GROUNDS AND/OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EIT HER AT THE TIME OF HEARING OF THE APPEAL OR BEFORE. 4. THE LEARNED AR ARGUED THAT THE PENALTY WAS INIT IATED ON ONE CHARGE I.E FOR CONCEALING THE PARTICULARS OF INCOME AT THE TIME OF ASSESSMENT PROCEEDINGS BUT LEVIED ON THE CHARGE I.E FOR FURNISHING INACCURATE PARTICU LARS OF INCOME. HENCE HE ARGUED THAT THE PENALTY LEVIED U/S 271(1)(C ) ON THE CHARGE IS DIFFERENT FROM THE CHARGE ON WHICH THE SATISFACTION WAS RECORDED BY THE LEARNED AO AT THE TIME OF ISSUANCE OF PENALTY NOTICE AND ACCORDINGLY PRAYED FOR DELETION OF THE P ENALTY. HE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY REPORTED IN (2013) 35 TAXMANN.COM 2 50 (KARNATAKA) IN SUPPORT OF HIS CONTENTIONS. IN RESPONSE TO THIS, THE LEAR NED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN THE INSTANT CASE THAT THE ASSESSEE HAS BEEN CHARGED WITH ONE OFFENCE OF CONCEALING THE PARTICULARS OF INCOME WHI LE INITIATING THE PENALTY PROCEEDINGS BY THE LEARNED AO. IT WILL BE RELEVANT TO REPRODUCE THE RELEVANT PORTION OF THE ASSESSMENT ORDER RECORDING SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT, AS BELOW:- I AM SATISFIED THAT IT IS A FIT CASE FOR INITIATIO N OF PENALTY PROCEEDINGS U/S 271(1)(C ) OF I.T. ACT, 1961 FOR CONCEALING THE PARTICULARS OF INCOME. ACCORDINGLY, PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE I.T.ACT, 1961 IS INITIATED SEPARATELY. WHEREAS THE LEARNED AO WHILE LEVYING THE PENALTY U/ S 271(1)(C ) OF THE ACT HAD ACCUSED THE ASSESSEE FOR ANOTHER OFFENCE I.E FURNIS HING INACCURATE PARTICULARS OF INCOME. IT WILL BE RELEVANT TO REPRODUCE THE RELEV ANT PORTION OF THE PENALTY ORDER RECORDING SATISFACTION FOR LEVYING PENALTY U/S 271( 1)(C ) OF THE ACT, AS BELOW:- ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 4 IN VIEW OF THE ABOVE, I AM SATISFIED THAT IT IS A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C ) FOR FURNISHING INACCURATE PA RTICULARS OF INCOME. WE HOLD THAT MERELY BECAUSE THE ASSESSEE ACCEPTED A DDITION AND DID NOT CHALLENGE THE ASSESSMENT ORDER BY WAY OF APPEAL, IT CANNOT BE CON CLUDED THAT SUCH ADDITION AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD BE SPECIFIC ALLY INFORMED ABOUT THE SPECIFIC CHARGE ON WHICH HE HAS COMMITTED THE OFFENCE I.E WH ETHER HE HAS CONCEALED THE PARTICULARS OF INCOME OR HE HAS FURNISHED INACCURAT E PARTICULARS OF INCOME. ADMITTEDLY THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT CONTAINS TWO LIMBS WHICH ARE COMPLETELY SEPARATE AND DISTINCT. WE FIND THAT OUR PROPOSITION IS ENDORSED BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACTORY REPORTED IN (2013) 35 TAXM ANN.COM 250 (KARNATAKA) IN THIS REGARD AND HENCE THE RELIANCE PLACED BY THE LE ARNED AR ON THE SAID DECISION IS WELL PLACED AND DIRECTLY ON THE IMPUGNED ISSUE. TH EIR LORDSHIPS OF THE KARNATAKA HIGH COURT HELD AS BELOW:- 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY AT TRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PE NALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENAL TY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOT HER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT B E SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTE NCE OF THE GROUNDS MENTIONED IN SECTION 271(L)(C) WHEN IT IS A SINE QU A NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONF INED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE G ROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CL AIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GRO UNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHOR ITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS O THER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 5 PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FIN AL ORDER IMPOSING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTI CAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PE NALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERM INED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HAND S OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASS ED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, W AS NOT SUSTAINABLE. RESPECTFULLY FOLLOWING THE AFORESAID JUDGEMENT OF T HE KARNATAKA HIGH COURT , WE HOLD THAT THE PENALTY INITIATED IN THE ASSESSMENT PROCEE DINGS ON THE GROUND OF CONCEALMENT OF INCOME BUT LATER IMPOSED ON THE GROUND OF INACCU RATE PARTICULARS OF INCOME IS BAD IN LAW. FOR THE REASONS GIVEN HEREINABOVE, WE HOLD TH AT THE LEVY OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED. WE THEREFORE CANCEL THE ORDER IMPOSING PENALTY ON THE ASSESSEE AND ALLOW THE APPEAL BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 20 -01-2016 SD/- ( MAHAVIR SINGH JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 20 -01/2016 ITA NO. 1221/KOL/2011-A-AM M/S. ATIBIR HI-TECH PVT. LTD 6 1.. THE APPELLANT: M/S. ATIBIR T-TECH TECH PVT. LT D 7B (7 TH FL) 20B ABDUL HAMID (BRITISH INDIA STREE), KOL-69. 2 DY. COMMISSIONER OF INCOME-TAX, CC-XI, 18 RABIND RA SARANI, PODDAR, 5 TH FL., KOL - 1. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS COPY OF THE ORDER FORWARDED TO: -